France Must Discourage Bank Data Theft, Macron's Swiss Man Says

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This content was published on July 14, 2017 10:45 AMJul 14, 2017 - 10:45

(Bloomberg) -- France should not follow Germany’s lead in endorsing the theft of banking data on its own citizens who have kept money abroad, according to the French parliamentarian who represents his 150,000 fellow countrymen in Switzerland.

“We should not encourage this way of proceeding, this stealing of data,” Joachim Son-Forget said in an interview in Paris a month after he was elected by 75 percent of French voters in Switzerland. “My ideal is that we reach a point where there is a cohesion and distribution of information in a free and clear way.”

Newly-elected President Emmanuel Macron will meet his Swiss counterpart Doris Leuthard on July 18 in Paris to discuss among other things a fresh accord the two nations struck to resolve a spat over whether Switzerland would exchange information with its neighbor on French clients of UBS Group AG. On July 12, the Swiss Federal Tax Administration said that both countries had come to an agreement and and can move ahead with outstanding requests. France is seeking detail on more than 10,000 clients based on information it received from German authorities while separately prosecutors in Paris have accused the Zurich-based bank of helping French clients avoid taxes by moving their assets to Switzerland.

Tensions began climbing more than six years ago when tax officials in Germany on several occasions paid for stolen data on Swiss bank accounts held by German clients, a practice the nation’s top constitutional court ruled acceptable if used for a legitimate probe into tax evasion.

Then a former employee of HSBC Holdings Plc’s Swiss unit took data on clients that he first tried to sell before handing it to French prosecutors, who used it to build a case against local tax evaders. The Frenchman was convicted in 2015 by the Swiss for corporate espionage, five months after HSBC paid a 40 million-franc ($41 million) fine for “past organizational deficiencies” to avoid criminal charges.

Macron Sweep

Son-Forget, 34, is one of 11 new deputies in the National Assembly that represent French expatriates. Ten of the 11 deputies are from Macron’s La Republique En Marche party, that was founded just 14 months ago. The party won a sweeping majority in June elections and plans to use that clout to overhaul France’s labor laws to lure foreign investment and reform its tax code to entice wealthy expats to return home from places like Switzerland.

At the heart of the French case against UBS is the allegation it illicitly solicited clients to move their money to Switzerland. The bank has been ordered to stand trial -- though no date has yet been set --- after settlement talks with French authorities broke down over the size of the fine. “UBS has made clear that the bank will contest the allegations and the legal qualifications made by the investigating judges,” the bank said in a statement. “We will continue to strongly defend ourselves.”

Son-Forget, speaking over croissants and coffee in the canteen of the National Assembly in Paris, said it was hard for him to comment on the UBS case, but says the historic ties between the two countries are strong and the “Franco-Swiss relationship cannot be tripped up whenever there is a bump in the road.”

To read more on Swiss bank secrecy, click here

Barely an hour after Son-Forget spoke to Bloomberg, the Swiss announced they had reached an agreement with their French counterparts, having “been able to find answers to outstanding application issues and several which had emerged in recent months” and are “now in a position to pursue the exchange of information upon request in all pending and future cases effectively.” Patrick Teuscher, a spokesman for the Swiss Tax Office, declined to confirm if the agreement includes a clause prohibiting French tax officials from sharing information they obtain from such requests with local prosecutors.

The accord “is a very positive first step” for Franco-Swiss diplomacy so early in President Macron’s mandate and is a deal “whose scope goes far beyond just the administrative issue,” Son-Forget wrote by email later.

He evoked Former French President Francois Mitterrand comments that Switzerland “was the country closest” to France. “This phrase appears justified more than ever,” Son-Forget said.

Korean Roots

Son-Forget knows the two countries well. Adopted as an orphan from South Korea by a French couple, he grew up in Dijon. He moved to Paris to study at the Ecole Normale Superieure, working nights as a nurse to earn his way. After earning his Masters in math and cognitive science in 2005, he moved to Switzerland, first to Lausanne for his medical training and then to Geneva, where he lives to this day. He continues working one day a week as a radiologist to allow him to keep up his expertise and teaching.

For Son-Forget, a father of two, his first weeks as a deputy have been a whirlwind of meetings with officials including Macron’s economy minister Bruno Le Maire as he tries to pack as much as he can into the three to four days a week he spends in Paris.

It leaves him little time to practice the harpsichord, which he plays at recital-level, so now he’s contemplating getting one for his government office. “It’s a bit tight,” he says, “So it’ll have to be an epinette -- a mini harpsichord.”

And with that, he’s off, heading that evening to a reception at the Swiss Embassy for an early celebration of the country’s Aug. 1 national holiday.

To contact the reporter on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net.

To contact the editors responsible for this story: Alan Katz at akatz5@bloomberg.net, Zoe Schneeweiss, Richard Bravo